Bell, Trevor : Unemployment in South Africa

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grawth in general rather than to an increase in the capitalintensity of production. The perhaps yet more basic problem remains, however, of deciding what forces have been responsible for the decline in economic growth rates in the late 1960s and early 1970s. This is a difficult and controversial issue but clearly it is one vhich cannot be side-stepped if we seriouely wish to come to grips with the questions such as whether South African unemployment is lon~term or cyclical, structural or transitional, voluntary or involuntary etc. It raises the whole difficult question of the nature and causes of business cycles, in particular of lon~swings in the level and rate of expansion of economic activity1) This is clearly no place to attempt a full-scale analysis of this issue, and the main purpose in raising it here is to emphasize the kind of factors vhich seem most relevant. Since, as we have argued, the problem of rising unemployment rates is a worldwide one, we must clearly take into account some of the factors which have been operating at a global level, even though this does not mean that there are not considerations peculiar to South Africa, or that south African conditions do not call for distinctive policy responses which are significantly shaped by these conditions. The three major forces underlying the long global downswing are: (a) The rise in raw materials prices from the mid-sixties, with the increase in the price of oil in 1973 and 1971 being only the most dramatic manifestations of the problem; (b) The slowing down of the process of diffusion of technology from advanced industrial countries to industrialising Third World countries, which had been underway for a considerable period of time2). (c) The downward 1) Whether one regards It as cyclical or not, what seems clear is that the economic decline beginning between 1968 and 1973 has already gone on for a whole decade and shows no signs of ending. 2) This may also be seen as the end of a Schumpeterian, innovative upsving which had been in progress for Borne time.
pressure on the relative price of manufacturers due to the rapidly increasing productivity and hence international competitiveness of the "newly industrializing countries" and Japan, which also assumed major proportions in the late 1960s'). These factors depressed profitability in manufacturing industry, and produced a severe problem of adjustment in the advanced industrial countries. The same three global forces have also influenced South Africa, both directly and through their effect on the economies of the advanced industrial countries, slowing down economic growth and increasing unemployment rates here as they have done abroad. Their impact has been alleviated to some extent in the South African case by the expansionary or spending effects of two major gold bmms, but at the same time, by raising the foreign exchange value of the Rand these booms have worsened the competitive position of South African goods, especially of manufacturers, vis-2-vis foreign produced goods. Thus these booms have not been an unmixed blessing as regards the expansion of output and employment in traded goods sectors. In addition to this, political developments in Southern Africa in the past decade have also been unfavourable to private investment by business firms, and though both domestic and foreign capital will, naturally, continue to display cyclical movements, political considerations and the increasingly obvious desire to diversify investment portfolios internationally may well also have a longer-term effect. The above clearly does not represent a full scale analysis of the determinants of South African growth rates in the past decade, but it outlines the essentials of the view taken in this study, after careful consideration of these and other alternatives. The necessity of considering the causes of the long downswing in the South African economy, and of taking a view on the matter, in dealing with the question of unemployment in South Africa, would seem to go without saying. It is not possible sensibly to deal with the question 1) See Beenstock (1983) for discussion of these problems.
Page 2 and 3: INSllIUTt TOR SOCIAL AND ECONOMIC R
Page 4 and 5: i CONTENTS Page - u.t of Tabla0 and
Page 6 and 7: Preface This paper is an extension
Page 8 and 9: Applications by whltea for Employme
Page 10 and 11: Simkins. His work is noteworthy par
Page 12 and 13: There is not, to my knowledge, anot
Page 14 and 15: The evidence thus suggests a persis
Page 16 and 17: ~i~~~~ 1: UNEMPLOYMENT PATES: UNITE
Page 18 and 19: Table 5: Unemployment Rates in Scnn
Page 20 and 21: Thue in a number of other countries
Page 22: Table 6 Registered Unemployment Rat
Page 25 and 26: Table 7 Non-Agricultural Employment
Page 28 and 29: In the case of Blacks, employment g
Page 30 and 31: governwant intervention in foreign
Page 32 and 33: Real Intwraat Rats and Rats of Incr
Page 34 and 35: Table 9 Real Interest Rates and Ave
Page 38 and 39: hetbr th. unemployment in voluntary
Page 40 and 41: it is argued that for a small open
Page 42 and 43: imzlO.ion of this form of voluntary
Page 44 and 45: significance1). However, the findin
Page 46 and 47: Thus where the unemployment rate sh
Page 48 and 49: have expected a substantial increas
Page 50 and 51: vii) Finally, amongst the causes of
Page 52 and 53: traditionally been considerably hig
Page 54 and 55: already become much more difficult
Page 56 and 57: unemployment is deregulated markets
Page 58 and 59: 'thirties and even the postvar peri
Page 60: might, JB (1982) "The Nature of Une

Bell, Trevor : Unemployment in South Africa

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